Due Diligence
The investigation a buyer performs before completing a purchase: inspections, title review, verifying leases and income, checking taxes, insurance costs, and anything else that could change the deal’s math. Purchase contracts often include a due-diligence or inspection period during which the buyer can renegotiate or exit under the contract’s terms.
Related terms
Earnest Money
A deposit the buyer puts down when an offer is accepted to show serious intent, typically held by a neutral party such as an escrow or title company. At closing it is credited toward the purchase. Whether it is refundable if the deal falls apart depends on the contract’s contingencies.
Escrow
An arrangement where a neutral third party holds money or documents until agreed conditions are met — for example, holding a buyer’s deposit until closing. The word also describes lender-managed accounts that collect property taxes and insurance alongside the mortgage payment and pay those bills when due.
Comps (Comparable Sales)
Recently sold properties similar to a subject property in location, size, age, and condition, used to estimate what the subject is worth. Appraisers, agents, and investors adjust comp prices up or down for differences before settling on a value. The quality of a valuation is only as good as the comps behind it.
Lease Abstract
A condensed summary of a lease’s key terms: the parties, unit, rent, start and end dates, deposits, renewal options, and who is responsible for what. Abstracts let an owner, buyer, or lender review the essentials of many leases without rereading every full document. They summarize the lease but do not replace it — the lease itself governs.